Allowed Quote by Ben Bernanke
“I would argue that no financial instrument counted as regulatory capital should be allowed to receive any protection from losses.”
About This Quote
Source Speech: Testimony before the U.S. Senate Banking Committee, 2009
Regulatory capital instruments should not be shielded from losses, ensuring banks bear true risk.
In simple terms: Capital must absorb losses, not be protected.
Demand true risk absorption.
Themes
Mood
Type
When to use this quote
- bank governance
- stress testing
- investment decisions
- loan underwriting
Key Concepts
Questions to Reflect On
- How would unprotected capital affect lending?
- What alternatives exist for risk mitigation?
Banks may lack sufficient buffers if all instruments are unprotected.